Since 2007, Biman has been operating as a public limited company
The government is all set to exercise more authority over the administrative and commercial functions of Biman Bangladesh Airlines.
The cabinet on Monday cleared in principle the draft of Bangladesh Biman Corporation (Repeal) Bill, 2020 as the existing Bangladesh Biman Corporation Ordinance, 1977 is not required anymore, since Bangladesh Biman became a company in 2011.
The relevant functions described in the ordinance are now bestowed upon the company, Cabinet Secretary Khandker Anwarul Islam told reporters at a press briefing.
With this development, aviation experts said the government’s control in the company had been further established under the law, but the government needed to maintain accountability, transparency and disclose shareholder positions which could keep more profit afloat under the permitted draft law.
Although Biman Bangladesh Airlines will now be operated under the Companies Act, the authority to dissolve and reorganize the board of directors will remain under the government.
Besides, the government can take any steps regarding the national flag carrier now.
Senior Secretary of the Ministry of Civil Aviation and Tourism Mohibul Haque said the ordinance was abolished because of its ineffectiveness and now the national flag carrier would operate according to the company law.
However, the right of shareholders to make decisions or policy now matters under the Companies Act, 1994, and the AGM (annual general meeting) will be the highest decision-making body. Public companies hold annual general meetings for shareholders.
But the government has kept the shareholder positions of Biman Bangladesh and closed them to outsiders.
‘More profitable if open to outsiders’
Aviation expert ATM Nazrul Islam said the government could take more control under this law, but the airways would be more accountable and profitable if it came into the capital market.
“Biman has a lot of resources now. If they [Biman] can get in the sharemarket, people can become its shareholders and it will also create a big market for Biman. Ultimately, the government will be more benefited,” he added.
In 2007, the government added Section 28 (A) to the 1977 Ordinance to create a public limited company called “Biman Bangladesh Airlines Limited” instead of Bangladesh Biman Corporation.
The national flag carrier has been operating in accordance with the 1977 ordinance so far, but the High Court has declared all the ordinances, rules and regulations issued during the military regime as illegal.
Since 2007, Biman has been operating as a public limited company.
According to the draft Bangladesh Biman Corporation (Repeal) Act, the government will be able to take necessary steps for efficient management although Biman will operate under the Companies Act.
The government will have the power to remove the board of directors, terminate contracts, change or amend any contracts or document.
If any activities have been taken as per the repealed ordinance, the concerned authority can continue it.
Licences, contracts, registrations, approvals granted under the repealed Corporation Act will be considered as permission by the airline.
Biman’s current position
Bangladesh Biman has incurred a revenue loss of over Tk1,700 crore while its capacity loss was 26.58 % in February and 75.89% as of March.
In FY 2018-19, it earned Tk218 crore profit.
Following the losses this year because of the Covid-19 pandemic, Biman sought a Tk1500 crore fund and later on April 30, Sonali Bank approved a loan of Tk1,000 crore for Biman Bangladesh Airlines with conditions.
However, Biman earned revenues from operating chartered flights during the time.
Currently, Biman has extended the suspension of all international flights – except to Dubai, London and Kuala Lumpur – as well as its chartered flights on various destinations. The airline meanwhile operates two regular cargo flights each week to Hong Kong and Guangzhou.